Supply chain network optimization
Assets & facilities Supply chain management
• Introduction Groenewout
• Supply chain optimization
• Project approach
• Data requirements
• References
Groenewout is an international, independent firm
providing a comprehensive range of professional
consulting services and transition support focused on
business improvements related to supply chains and
logistics across all industries.
Sourcing
Assets & facilities
Supply chain management
BREDA
Multi-disciplinary supply chain & logistics consulting
Business improvements based on quantification,
simulation, visualization and modeling
Realistic, pragmatic approach
Hands-on experience in operational environments
& implementation processes
Independent & 40 years proven success.
Pan-European marketplace, local expertise
References within wide range of industries - long
lasting client relations
Quality measured by our clients
Cross industries
z Pharmaceutical
z FMCG
z (Fine) chemical
z After market / spare parts
z Home-improvement
• Introduction Groenewout
• Supply chain optimization
• Project approach
• Data requirements
• References
OPTIMAL
SUPPLY CHAIN
NETWORK
INBOUND
TRANSPORTATION
COSTS
CUSTOMER
SERVICE
REQUIREMENTS
INVENTORY &
WAREHOUSE
COSTS
OUTBOUND
TRANSPORTATION
COSTS
Trade-off philosophy
• line haulage: less line hauls costs decrease
• fine distribution: more final distribution km’s costs increase
• handling factory WH: factory warehouse ‘as-is’ no changes
• handling & storage DC’s: increasing economies of scale costs decrease
• inventory costs: increasing economies of scale, lower working stock, lower safety stock required
costs decrease
Trade-off philosophy
Supply chain optimization
• Introduction Groenewout
• Supply chain optimization
• Project approach
• Data requirements
• References
THE MOST
COSTS
EFFECTIVE
SOLUTION
MEETING
CUSTOMER
SERVICE
REQUIREMENTS
TO DETERMINE
THE MOST
OPTIMAL SUPPLY
CHAIN NETWORK:
FACILITATES THE FUTURE STRATEGY
Goal
•
Identification of Quick-wins for the current supply chain
•
Identification of the optimal supply chain network in terms
of function, size, location and service metrics for
distribution centers, inbound and outbound transportation
•
Illustration of the total operational costs associated with
the optimal network
•
Presentation of high-level rollout plan for the
implementation of the optimal network
Deliverables
Distribution concept analysis & simulation
Sensitivity analysis
Set-up & verification of distribution network model
Analysis current supply chain &
Desired future supply chain
Volume & costs data
Strategic assessment
Customer service metrics validation
Implementation & transition plan
Project approach
Create consensus on data, constraints, requirements and assumptions
on which the distribution network optimization will be based:
Level of detail modeling
Warehousing & transportation related data
Operational and customer service constraints
Future trends
Business requirements
Interviews and data collection:
Data workshop
Data gathering (warehousing, transportation)
Strategic assessment
Data analysis
Basic data document
GOAL
ACTIVITIES
Model of the distribution network in software simulation tool: Base
Case Model
Building the distribution network model, consisting of three steps:
Building the current distribution model
Verification of model with real-life figures (calibration of the model)
Calculating current overall supply chain costs
A distribution network model which will be used for further analysis of
the different distribution network concepts (see next project phases)
GOAL
ACTIVITIES
DELIVERABLES
Simulation of several distribution concepts. The results
per concept are:
Number of warehouses
Location (position) per warehouses
Function of the warehouses (all SKU’s or subset)
Service areas of the warehouses
Simulation of the effect of different supply chain structures and
concepts:
Yearly operational costs: warehousing, transport, inventory
Warehouse characteristics: sizing, market areas, etc.
Impact on requirements: lead-time, customer service
Evaluation of all distribution concepts against actual costs and
performance
GOAL
ACTIVITIES
Determine the “robustness” of the preferred solution
Carrying out sensitivity analyses on variables such as:
Growth percentages
Customer service metrics: lead-times, reliability, etc.
Average order size
Acquisition of new business
Validation of the robustness of the preferred supply chain & insight in
the business parameters directly affecting the selection of a preferred
supply chain concept
GOAL
ACTIVITIES
DELIVERABLES
Implementation & transition plan to transfer from the current supply
chain network to the preferred supply chain network
Analysis and design of an implementation and transition plan:
indication of the timing and effort the implementation of the new
distribution network embeds
high level investment estimate (insourcing versus outsourcing
activities)
risk mitigation for implementation of the new distribution network
GOAL
ACTIVITIES
•
Introduction Groenewout
• Supply chain optimization
• Project approach
•
Data requirements
• References
VOLUMES
INVENTORY
QUALITATITVE
Inbound (suppliers to plant)
Inventory volume & value
Customer service
Primary (plant to DC)
SKU overlap between DC’s
Lead-times
Inter-company
Business requirements
Direct (plant to customers)
Future growth
Outbound (DC to customer)
Customer strategy
FINANCIAL
WAREHOUSE
Transportation costs
Storage capacity
Warehouse costs
Storage characteristics
Production costs
Inventory costs
Logistics equipment
Personnel
Contracts (outsourced)
PRODUCTION
Product portfolio
Production capacity
MASTER DATA
Product codes
Product grouping
Unit of Measure
Data requirements (1)
VOLUMES
Inbound
Supplier (shipping location - zip code) Destination (plant location - zip code) Volume shipped (m3 / kg / pallets)
Transport mode (LTL/FTL, air/road, special conditions, ...) Transport conditions
Number of shipments
VOLUMES
Outbound
Warehouse or plant location (zip code) Customer (ship-to location - zip code) Volume shipped (m3 / kg / pallets)
Transport mode (LTL/FTL, air/road, special conditions, ...) Transport conditions
Number of shipments
VOLUMES
Primary &
Inter-company
Warehouse or plant location (Point of origin - zip code) Warehouse or plant location(ship-to location - zip code) Volume shipped (m3 / kg / pallets)
Transport mode (LTL/FTL, air/road, special conditions, ...) Transport conditions
WAREHOUSE
Warehouse location Owned / outsourcedFootprint: m2 warehouse operations, m2 offices
Storage capacity: pallet locations, shelf locations etc. Storage conditions
Fill rate per location type including maximum storage capacity VAL activities
Personnel (receiving, picking, expedition, management, ...)
Logistics equipment (rental/lease, book value, depreciation period, ....) Costs (personnel, building, equipment, packaging, others)
Contract penalties if applicable Warehouse extension possibilities
PRODUCTION
Plant locationProduct portfolio to be produced
INVENTORY
Warehouse location Inventory volumes Inventory value Stock turnsNumber of SKU’s
SKU overlap with other warehouses
MASTER DATA
Product code Product groupUnit-of-Measure transformation table Product value (COGS)
FINANCIAL
QUALITATIVE
Transportation costs
- Per point of origin/destination
- Per inbound / inter-company / outbound Inventory costs
Warehouse costs (see warehouse) Production costs (see production)
Lead-time expectations Future sales growth
• Introduction Groenewout
• Supply chain optimization
• Project approach
• Data requirements
• References
Description
Supply chain project for JohnsonDiversey, an industry leader in cleaning and hygiene solutions to the institutional and industrial marketplace.
JohnsonDiversey serves customers in the lodging, food services, retail, health care, food and beverage sectors as well as building service contractors worldwide.
Opportunities
Recently, JohnsonDiversey commissioned a business study, resulting in an updated business strategy. In the area of supply chain management JohnsonDiversey defined three main improvement opportunities.
JohnsonDiversey management was committed to improve their supply chain in terms of operational costs and
optimize their product delivery by detailing and implementing the defined supply chain opportunities.
Solution
Groenewout analyzed different alternative logistics networks for different supply chains.
A sub-regional logistics model was determined to be the optimal solution for chemical products and utensils. For machines and accessories products a centralized solution with maximization of central stock function and direct shipments was determined to be the optimal solution.
Benefits
•Substantial annual operational cost reduction in total supply chain costs
•Significant decrease of European inventory
•Increased flexibility
•One integrated logistics concept and organization as a shared service.
Space for photo
Description
Nestle Purina PetCare (formerly Friskies) is a producer and distributor of pet food and accessories. Nestle Purina PetCare owns several factories and numerous
warehouses in Europe.
Opportunities
Friskies European Logistics team was committed to improve their distribution in terms of performance and costs for the Benelux countries and Germany.
Solution
Groenewout analyzed different alternative distribution networks. Caused by the uniqueness of articles per
country market, consolidation per country was determined to be the optimal short term solution.
After executing a benchmark analysis Groenewout proved to Nestle that particular contracts for warehousing were too expensive. The decision was made to contract with one logistics service provider to consolidate the German warehouses.
Groenewout developed a RFP for selecting a new logistics
Benefits
The selected service provider proposed:
•10+% Cost reduction in German warehouse costs
•Increased quality and flexibility
Future opportunities
Creating overlap of articles between countries, product rationalization and changes in product sourcing will reduce the annual logistics costs significantly.
Description
Ideal Standard is the world’s largest manufacturer of bath & kitchen products. The range of products include:
faucets, fixtures, whirlpools, accessories, showers and sinks. Brands include American Standard JADO, Borma, Armitage Shanks, Ceramica Dolomite, Porcher and Ideal Standard.
Opportunities
As a result of several mergers and acquisitions, the “AS-IS” network in Europe contained around 25 distribution centers.
Ideal Standard desired to the optimize its existing European supply chain for fixtures and fittings. The preferred distribution structure should be streamlined:
• Minimize the total distribution costs
• Maximize customer service.
Solution
A detailed analysis of existing distribution network and customer service metrics characteristics was conducted. This provided a critical overview of the current supply chain.
Supply chain simulation models were used to determine the optimal distribution structure: number, location, market region and function of the European distribution centers.
Benefits
• Insight into current supply chain characteristics and performance provided by the systematic analysis
• 15% savings on the total European transportation and warehousing costs were identified.